It's a good enough non-stock blog that some of us wade through all the gossipy pulse-watching to get to the chewy stuff at the center (Thanks CR and Tanta!). I'm beginning to think that bears and bulls are essentially baseball teams with slightly different pin-stripe suits and a 12-month season.
Reminds me of the CEO of, was it Fortis(?), who said things were going to collapse in the US in the next few weeks and he got them out -- at a big loss -- just in time.
Perhaps he wasn't entirely self-serving in his comments.
We need some, or at least one, government owned banks and brokerages. They would be useful since private ones would have to be almost as solid and secure as the government ones or they wouldn't have any depositors or customers. I'd like to have a government bank to keep my money and a government broker to keep my stocks for me. I'd sleep better.
It's not bears and bulls, it's people who can constantly do the calculus of true worth, human psychology and game theory vs. those who are wedded to what they think worked for them in the past(wright model B, anyone?)
giacutter said: "Fannie and Freddie couldn't possibly go tango uniform. It would be financial armaggedon, right?
Right?"
Right. And the U.S. banking industry, the Fed, the President, Congress and every foreign central bank on the planet are going to stand idly by and allow that to happen.
Right. And the U.S. banking industry, the Fed, the President, Congress and every foreign central bank on the planet are going to stand idly by and allow that to happen.
Added Mr. Paulson, "For market discipline to effectively constrain risk, financial institutions must be allowed to fail."
I usually follow the market with Google's flash charts. Yesterday's close shows up as a dotted red line. By my count the DJIA has already crossed that line 9 times today. A real knife fight.
to be honest i think the equity travails are irrelevant -- anyone who couldn't see nationalization and an equity wipeout was on the board isn't watching, and a lot of risk was probably hedged.
the disturbing part are FNM/FRE bonds, which underlie most of the american financial system. they are erupting today. that is extremely bad.
The PPT stick saves are getting too frequent and are too obvious. Those 10 sec 30 point jumps are quite the symbol of American arrogance.
isn't that the truth! anyone who thinks markets are free in this country needs their head examined. PPT is out in force buying equity futures trying to prevent a meltdown.
so far for me the highlight has been Trish Regan. What a babe!
Ben said: "We're still thinking about ideas of what to do in the short term." or words to that effect, And "We'll be in close contact with you (Congress) about this." Or words to that effect.
Man, what a hand job. I'm reminded of when Mozillo and others appeared before this same august group. Softballs, and marshmallows. Imprecise statements and used hay.
Right. And the U.S. banking industry, the Fed, the President, Congress and every foreign central bank on the planet are going to stand idly by and allow that to happen.
Last chance at the brass ring for the crony capitalists in the White House to eliminate GSEs, a perennial bugbear.
"We cannot allow them to fail," McCain told reporters at a diner in Livonia, Michigan. "They are vital to Americans' ability to own their own homes, and we will do what's necessary to make sure that they continue that function."
The WSJ article on Fannie suggested a government capital infusion. This to me feels like bailout-lite. Instead of assuming all the outstanding obligations at once, the Feds could buy an equity stake and then wait to see what happens.
I would imagine this would be dilutive to the stocks.
This is a no brainer here, i.e, " conforming accounting measure". These entities as we know them will simply change the way they measure reality. I used to be pissed off with companies that would post as-adjusted-for GAAP EPS, but in time, you begin to see a slower rate of decay as larger adjustments are added into the sewage of dilution!
I think you may be missing the point. They fail if they fail, if the "govt" has tostep in and prop up that means they have already failed once. What the govt does after the fact determines if the public sees a second failure or a salvation...
"Congress may wish to consider whether new tools are needed for ensuring an orderly liquidation of a systemically important securities firm that is on the verge of bankruptcy." -BS Bernanke
They want to catch them before they splat on the sidewalk - and strangle them quietly instead.
It may not be a stock blog but all investors should get familiar with charting (and basic TA), whereas I know that a lot of people never look at charts. So it is easy to confuse the masses by just having the media mention market is up one day, down the next and so on... giving the impression of "volatility" as opposed to the solid establish downtrend we have. As David Tice (Prudent Bear fund in Dallas) said: "these days most investors are akin to frogs in water being heated very gradually, it does not realize its being cooked..." Bloomberg News
Have Paulson, Bernanke, Sheila Blair, or anybody else who is considering guaranteeing Fannie's and Freddie's bonds or bailing them out in any way, divulging where the government is going to get the money to participate.
"Have Paulson, Bernanke, Sheila Blair, or anybody else who is considering guaranteeing Fannie's and Freddie's bonds or bailing them out in any way, divulging where the government is going to get the money to participate."
Actually, all those future generations have been proving quite generous as of late. Those stimulus checks on their behalf were amazing!
The willingness of these future generations to backstop F&F bad debts is truly remarkable.
THREE CHEERS FOR THE GENEROSITY OF FUTURE GENERATIONS!
the graph shows a race to zero. Who will reach there first...
On a serious note, any Capital injection, even at an equity level may be dilutive but it will be positive for the stock price.
Short the spike on bailout announcement should be your watchword, problem is that today opportunity passing me by....however risk of bailout at anytime is real so I'm not playing
I'm sure no one wants to discuss the stock mkt with their Congressional reps, but you may want to recall how vulnerable your pension funds are to fraud by your fiduciary managers that are now able to play hedge fund gurus with your cash; thank Bush and 99% of Congress for your impending losses -- because your cash is available as swap bait! Many will recall the issue of exemptions for prohibited actions as they relate to your money being used for derivatives, etc... Thanks be to The Department Of Labor and Bush!
If you have not read the 1000 page PPA, you are not alone, and there is comfort in that, as misery loves company!
I remember in Taleb's book Black Swan he considered Fannie Mae to be sitting on a pile of explosives (all that mortgage debt). Not really much in the way of Good Black Swan potential, but plenty of Bad Black Swan possibilities.
Lance McDaniel said: "...They fail if they fail, if the "govt" has to step in and prop up that means they have already failed once. What the govt does after the fact determines if the public sees a second failure or a salvation..."
All I know is that this has been going on for over a year now, a great many small entities and a couple of large ones (Countrywide and Bear Stearns) have "failed", yet I still got my coffee and pastry at Starbuck's this morning and I've got a guy coming over to fix my garage-door today. The only place the financial/mortgage/housing world is coming to an end is in the headlines.
If I had invested in $Z(Zimbabwe) I would be a trillioner(?) by now. We need a Mugabe and we need him now. So don't forget to vote for Mugabe in November.
bad analogy seb I did as you did but the sbux branch is getting closed along with 300 or whatever others and jobs crap as they are so it isn't just headlines hasnt been for a while
Sebastian wrote: All I know is that this has been going on for over a year now, a great many small entities and a couple of large ones (Countrywide and Bear Stearns) have "failed", yet I still got my coffee and pastry at Starbuck's this morning and I've got a guy coming over to fix my garage-door today. The only place the financial/mortgage/housing world is coming to an end is in the headlines.
Meaning, this recession is all in your heads! Hooray for Phil Gramm and John McCain, our true savior!
Prepared Testimony of
Henry H. Hopkins
Chief Counsel and Vice President
T. Rowe Price Group, Inc. 404 : Page Not Found
To our knowledge, the Department has never identified a type of investment that was per se inappropriate for a plan investor. The Department has, however, recognized that certain types of plan investments may require a greater degree of sophistication on the part of plan fiduciaries. For example, in a letter describing fiduciary guidelines for the investment of plan assets in derivatives, the Department indicated that certain plan investments "may required a higher degree of sophistication and understanding on the part of plan fiduciaries than other investments."10
10 See letter from Olena Berg, Assistant Secretary Pension and Welfare Benefits Administration, U.S. Department of Labor to Eugene Ludwig, Comptroller of Treasury (March 21, 1996).
The only place the financial/mortgage/housing world is coming to an end is in the headlines.
seb, as always i appreciate your context -- but you should talk to my several friends who work/worked for various banks here in the midwest. many are looking at retirements delayed -- IF, that is, they get to keep their jobs, which is not at all certain -- or, if already retired, huge curtailments of plans thanks to collapsing legacy investments, in some cases looking at going back to work somewhere.
another good friend of mine is a manager for steve & barry's -- he's today i'm sure wondering how he's going to get another job to keep things going for his young family.
let's not pretend the world isn't ending -- it is, but only incrementally and (for the lucky ones) out of view.
Now wires reporting SAC is out saying it is bsuiness as usual with LEH - Steve Cohen agreed to sing after being stripped naked, exposed to a growling german shep and photographed for posterity
The only place the financial/mortgage/housing world is coming to an end is in the headlines.
The financial sector posted 40% of corporate profits during the boomtimes.
Americans owed $5.3T on their homes in 2001. Today it's $10.6T.
But in the interim, wages have been flat. Either housing was undervalued in 2001, wages are going to double sometime soon, or the financial/mortgage/housing world as we know it is going to implode under TRILLIONS of bad debts this decade.
Having lived in Japan in the 90s I think I've seen how this plays out.
Hint: a lot of the banks that were around when I arrived in 1992 were either closed or operating under different names and ownership structures in 2000 when I left.
Sebastian wrote:
All I know is that this has been going on for over a year now, a great many small entities and a couple of large ones (Countrywide and Bear Stearns) have "failed", yet I still got my coffee and pastry at Starbuck's this morning and I've got a guy coming over to fix my garage-door today. The only place the financial/mortgage/housing world is coming to an end is in the headlines.
... and my neighborhood supermarket parking lots are still full of huge SUVs+Hummers ... some people never learn, plus they may not have to either. What percent of the population is that? I hope (not) they have a good portfolio manager though.
I've got a guy coming over to fix my garage-door today. Sebastian
If you handyman skills are as poor as your stockpicking ones I'd subcontract as well.
I'd like to thank Citi at this time who are paying for my San Fermin experience this year and for years to come(except next year when I go to shootzenfest in Hannover.)
Do I feel a little bad for your friends...Yes. But shit happens. I have been laid off twice in my life. The world doesn't end. You do what it takes to get on with life. Join the crowd...
So it is easy to confuse the masses by just having the media mention market is up one day, down the next and so on... giving the impression of "volatility" as opposed to the solid establish downtrend we have. -- Genevieve
I've noticed that when the Dow is up, NPR will say (for instance) "... Dow up 175 points today to 12,175." But if the Dow is down, they'll simply say "...Dow down 175 points today," omitting the close.
Where's Charles Schumer, ya know, with all this talk about insovency of financial institutions and systemic risk ? We need someone in a high profile position to spread a little fear today and start some good old fashioned bank runs.
Pah pah pah Paul...Pauls... Paulson refused to discuss systemic risk.
"let's not pretend the world isn't ending -- it is, but only incrementally and (for the lucky ones) out of view.
gaius marius | 07.10.08 - 11:53 am | # "
As always, one's view of the world is generally what one can see from where one stands. For the self-satisfied and incurious, that's good enough. Those who prefer to roam around a bit, see more.
Anonymous Bosch writes:
NPR boosterism
....IMO NPR does not do financial news too well (usually lagging and/or inaccurate + naive) but if you really want to feel sick you can listen to "market place" and particularly "that stockbroker from Dallas"... again IMO
Seb-The only place the financial/mortgage/housing world is coming to an end is in the headlines.
Not quite true. Here in the insulated land of the DC burbs... Neighbors who have relo'd caught with 300K losses, others that were here pre 2004 have taken a little too much equity out, but many bought toys that they are putting up for sale...
Garage doors and pastries aside, some habits are hard too quit even for those playing on paycheck to paycheck.
Its not all in the medias mind, we expereinced the 20-25% growth and the no docs and the existing HO ATM...
Over the last 3 years or more you have to give Case-Shiller and Roubini props for calling closer than anyone else so far..
But these neighbors dont play the markets they are invested in the Govt retirement system which even though is losing is not losing as fast as congress fund managers are our fund managers...
"All I know is that this has been going on for over a year now, a great many small entities and a couple of large ones (Countrywide and Bear Stearns) have "failed", yet I still got my coffee and pastry at Starbuck's this morning and I've got a guy coming over to fix my garage-door today. The only place the financial/mortgage/housing world is coming to an end is in the headlines.
"
I hope that Starbucks you went to isn't one of the 600 locations that's closing.
By Reuters | 10 Jul 2008 | 11:32 AM The White House remains focused on passing legislation on Fannie Mae
and Freddie Mac that will give confidence to the financial markets, a White House spokesman said Thursday, amid ongoing concerns about the mortgage finance heavyweights' capital levels.
"What we're focused on is getting legislation done for these important institutions, which will give confidence to markets so they can better perform their role," White House spokesman Tony Fratto said when asked whether the administration had discussed what to do if the two government-sponsored enterprises and major sources of mortgage financing falter.
"That's the single most important thing we need to accomplish.
how is having to come up with legislation supposed to make us feel more confident...its the actions before today that make us weary not the actions of tomorrow.........
Shares of commodity risk management firm FCStone Group Inc slumped over 50 percent Thursday, its biggest percentage drop ever, after posting a quarterly profit that fell short of analysts' view.
NPR is on in the background. It would be folly to use it as timely news, they're so often so late. Mrs.B who barely listens is constantly regaled with my screams apropos their latest absurdity.
"What we're focused on is getting legislation done for these important institutions, which will give confidence to markets so they can better perform their role,"
What we are doing is letting a couple of bankrupt companies who's insiders have been fleecing the public for years a pass and if we have to print money and throw it out of helicopters to bail these people out we will do it. Printing money and throwing it out of helicopters goes a long way toward restoring CONfidence. That and slipping a little pink to the taxpayers although I'm not to sure how many of those we still have.
PPT trying a massive pump to coincide with BB and Paulson's puppet show. I don't think it will work. Wheels will fall off this rally, and god knows where we end up. I think massively down at end of day.
The White House can pass all the legislation it wants, but show me the trillions. Maybe they can use leverage, just call some of the BSC folks for advice on that. Closing number is a toss up, but the PPT is really shoveling today, so it will be green, maybe 50 points, and Bubblevision will call it a victory representing faith in the whole system. We may be burying food by next week though.
Genevieve said: "... and my neighborhood supermarket parking lots are still full of huge SUVs+Hummers ... some people never learn, plus they may not have to either. What percent of the population is that? I hope (not) they have a good portfolio manager though."
Hey, I've been driving economy cars since the last oil crisis, and Carole King wrote "Pleasant Valley Sunday" about 40 years ago.
"...Another Pleasant Valley Sunday
Charcoal burning everywhere
Rows of houses that are all the same
And no one seems to care..."
There's nothing new going on here that I haven't seen before, except that anonymous strangers from all over the country can now commiserate about it to each other without wires.))
With all the multiple-percent moves in the indices and the feelings of being whipsawed we've had over the past week or two, the VIX stands right now only at 25.6.
That's basically the bottom end of the range where it spent most of January and all of March - and nowhere near the post-BSC peak of 35 and change.
If this is what a VIX of 25 feels like, what the hell's a retest of the mid-30s gonna do? I'm going long blood-pressure meds.
Sebastian writes:
"There's nothing new going on here that I haven't seen before, except that anonymous strangers from all over the country can now commiserate about it to each other without wires.))"
... not commiserating, I do not do emotion (or stress). And nothing is that new indeed, charts just look like 2001, for example. "Nothing is new" was my point
Mook: For what it's worth (from WSJ's MarketBeat):
Perhaps volatility isnt that low, however, writes options strategist Don Fishback, on his blog. He notes that implied volatility of individual members of the S&P 500 has risen, even though the VIX has been slow to rise (in part, he says, because of the length of time it has taken for the S&P to fall.)
Option volatility is not really low! Yes, index option volatility may appear low, he writes. But implied volatility of individual equity options is extremely high.
Adam Warner amplifies this on his blog as well. You have two very large sectors, financials and energy, often moving violently, but in opposite direction. The net effect maybe causes elevated individual stock volatility, but not enormous stock index volatility, he writes. Remember that market volatility has two main drivers. One is the volatility of the stocks themselves, and the other is the degree to which they correlate.
aww, come on guys, is it a coincidence that CR put up a chart just before it rebounded for today? Long time frame, go short. but for today, you should have covered at the time of the post.
I don't trade options, and I guess I always assumed the index volatilities were calculated taking the individual components into account. A "square root of the sum of the squares" calculation would do the trick - and that's high-school level math, for Christ's sake.
Eh, just one more data point you can't trust any more ...
So things have only just started to get bad with the foreclosures in the last 6 or so months. What happens a year from now, or two years from now, when even more homes foreclose and even more losses are heaped on to the lenders? How much loss can they take before large banks go under? And if banks start failing, is there enough FDIC insurance to save all the savers?
Zach ... etc:
XLF very near the monthly close lows tested in 2000, 2002 and 2003 so it is safe to assume there will be "volatility" there. Feel free to guess whether it will represent distribution or support.
The data point is trustable insofar as it says what it has always said. It's a measure of index volatility; why would you expect it to increase because of component volatility if the components correlate negatively and cancel each other out?
Ian Scott, Lehman's global strategist, is predicting an advance of 27 percent to 1,630, while David Bianco at UBS says the index will increase at least 25 percent.
Bears DALE WESTFOFF and LAURA GOODMAN @ UBS have been Institutional Investors #1 ranked mortgage analysts going on 10 years. T
Goodman wrote a glowing article about Alt-A securities last week hours before it leaked that UBS might be selling $20 billion of them to PIMCO.
I don't want to sound too cheery about this, but I'm thinking of buying a few thousand shares of Fannie. I think that valuing assets at fair market value doesn't make all that much sense when you see what the implied default/loss assumptions are.
Alec writes:
. I'd like to have a government bank to keep my money and a government broker to keep my stocks for me. I'd sleep better.
I've been exposed to more than my fair share of civil servants and the last thing I'd ever want is a custodial account thru any govt.
Alec | 07.10.08 - 11:12 am | #
The SS system and the Post Office work reasonably well. I don't see why ownership would make the employees lousy if management was up to snuff.
It's a measure of index volatility; why would you expect it to increase because of component volatility if the components correlate negatively and cancel each other out?
Well, that's why something like "square root of the sum of the squares" would be valuable; if one component has a +2 up move and another equally weighted component has a -2 down move, the net effect on index volatility might be zero, but the net effect on volatility using the formula above would be ~2.7. They wouldn't "cancel each other out" because there would be no negative numbers.
shrug As I said, I don't trade options. Far be it for me to suggest that, say, the Nasdaq Composite volatility index should, to be meaningful, actually represent the volatility of the underlying components of that index. I'll stop with the crazy talk now ...
only trade writes:
cover your shorts! contrarian indicators everywhere.
only trade | 07.10.08 - 12:47 pm | #
Nope this is a wave 3 down......they contrarian indicators will flash and flash and flash without a bounce. This is the point of recognition for a lot of people. Not everyone yet.
Misean......great commentary, I agree and think your dead on
I am beginnig to feel so F'in betrayed by the system. We are all being screwed royally.
As a fairly young american who's finally arrived at a point in his life after waiting and waiting to spread his "financial wings", our goverment is changing all the rules. They pass all of this "socialistic" crap of housing bills, TAFS etc., possible nationalizing (bailout) of FRE and FNM, Bear Stearns bailout, and Fed's increase in their powers, etc.
The big boys gamed the system, squeeze every last penny out if, they break the toy and run to daddy for help so they can atleast keep what they still have.
The dynamics of how american real estate is played is now being completely dismantled. I fear the system might be shot for an entire generation of americans.
Nothing allowed to fail means nobody is gonna make money either. This is pathetic.
From the <a href="http://www.nytimes.com/2008/07/11/business/11fannie.html?hp>NYTimes: Under a conservatorship, the shares of Fannie and Freddie would be worth little or nothing, and any losses on mortgages they own or guarantee which could be staggering would be paid by taxpayers.
So now the game continues: Business A has toxic junk that is stinkin' up the place.
Stockholders decide to jump ship while stock sinks.
Government (i.e. taxpayers) clean up the radioactive crap at a very high cost.
This isn't a stock blog
Yeah but we like to make it one
Reposting TED spread at 1.07...
Dow and Naz are positive. Get your PUTs - on sale now.
reposting glod up $16.3
Well Fanny and Freddie are bankrupt, are they not? Still way overvalued. Way way overvalued. They aren't worth nutin'.
They have recovered somewhat.. let's see what happens in a few hours.
It's a good enough non-stock blog that some of us wade through all the gossipy pulse-watching to get to the chewy stuff at the center (Thanks CR and Tanta!). I'm beginning to think that bears and bulls are essentially baseball teams with slightly different pin-stripe suits and a 12-month season.
Fannie and Freddie couldn't possibly go tango uniform. It would be financial armaggedon, right?
Right?
Haloscan acting up again.
anyone who is playing this market is nutz
the PTB are in process of systemically transmogrifying the game
I'm parked where there is no risk of zero, at least in the last 5,000 years.
Besides, all we really have to do is hold out til 2012.
Reminds me of the CEO of, was it Fortis(?), who said things were going to collapse in the US in the next few weeks and he got them out -- at a big loss -- just in time.
Perhaps he wasn't entirely self-serving in his comments.
A stuttering Paulson is not what I would call a calming influence.
Dow needs to drop 250 points to hit its next target. Let's do it today.
It is not a stock blog this is why no one of us is buying stocks. We are selling only.
We need some, or at least one, government owned banks and brokerages. They would be useful since private ones would have to be almost as solid and secure as the government ones or they wouldn't have any depositors or customers. I'd like to have a government bank to keep my money and a government broker to keep my stocks for me. I'd sleep better.
moin,
time for Charlie Gasparino ? to put up another "leaked" Lehman Memo.....
I'd sure hate to be those LEH investors that bought in in the high 20's last month...sheesh.
Please add GM - DOWN BIG also
"No generation has a right to contract debts greater than can be paid off during the course of its own existence." ~George Washington
RIP America's Debt-Based Monetary system
1980's - 2007
Done in by the extreme greed of capitalist pigs feeding at the obscenely leveraged debt liquidity trough.
But Charlie said that Lehman's offering options to keep employees was a sign of confidence.
Unless, of course, those options would be worthless, in which case it is sign of desperation.
Gasparino is the worst shill on CNBC, and that is really saying something.
FNM reports at the beginning of August and FRE at the end of August.
I doubt they will warn given the implosion of the last week or two.
I picked the wrong week to give up smoking.
It's not bears and bulls, it's people who can constantly do the calculus of true worth, human psychology and game theory vs. those who are wedded to what they think worked for them in the past(wright model B, anyone?)
Freddie, Fannie Shares Continue to Plunge
Fannie, Freddie Shares Fall as Capital Worries Persist - CNBC
Whenever the FED speaks.
km4 wrote:
RIP America's Debt-Based Monetary system
1980's - 2007
Hey now, km4! I thought we were kin! You probably meant only 1992-2000, right?
Starting to see some weakness on the DOW 30 components that had early gains.
Anon,
FUNNY!
Get the paddles and prepare for mouth-to-mouth... or is it mouth-to-taxpayer?
The whales are preparing to beach themselves.
giacutter said: "Fannie and Freddie couldn't possibly go tango uniform. It would be financial armaggedon, right?
Right?"
Right. And the U.S. banking industry, the Fed, the President, Congress and every foreign central bank on the planet are going to stand idly by and allow that to happen.
Sebastian
The PPT stick saves are getting too frequent and are too obvious. Those 10 sec 30 point jumps are quite the symbol of American arrogance.
``We are well capitalized and positioned to continue to serve our vital housing mission.''
http://jim.eponym.com/Spaceballs_Dark_Helmet.jpg
Right. And the U.S. banking industry, the Fed, the President, Congress and every foreign central bank on the planet are going to stand idly by and allow that to happen.
Added Mr. Paulson, "For market discipline to effectively constrain risk, financial institutions must be allowed to fail."
SS-
You can bet that those "investors at 28 got out right at the next run back to 28 and then shorted it.
No way they are still in it.....not a chance.
That says nothing about those wonderful incentives to the employees.....
Ciao
MS
I usually follow the market with Google's flash charts. Yesterday's close shows up as a dotted red line. By my count the DJIA has already crossed that line 9 times today. A real knife fight.
. I'd like to have a government bank to keep my money and a government broker to keep my stocks for me. I'd sleep better.
I've been exposed to more than my fair share of civil servants and the last thing I'd ever want is a custodial account thru any govt.
to be honest i think the equity travails are irrelevant -- anyone who couldn't see nationalization and an equity wipeout was on the board isn't watching, and a lot of risk was probably hedged.
the disturbing part are FNM/FRE bonds, which underlie most of the american financial system. they are erupting today. that is extremely bad.
"I'd sure hate to be those LEH investors that bought in in the high 20's last month...sheesh."
So when will these idiots stop making bonehead moves like this?
350+ visitors? Something big is goin' down.
· · · · · ·
The above was a morse code I received from FRE CEO - can anyone help me out??
The PPT stick saves are getting too frequent and are too obvious. Those 10 sec 30 point jumps are quite the symbol of American arrogance.
isn't that the truth! anyone who thinks markets are free in this country needs their head examined. PPT is out in force buying equity futures trying to prevent a meltdown.
crispy&cole,
It means "shit-on-self", or something...
so far for me the highlight has been Trish Regan. What a babe!
Ben said: "We're still thinking about ideas of what to do in the short term." or words to that effect, And "We'll be in close contact with you (Congress) about this." Or words to that effect.
Man, what a hand job. I'm reminded of when Mozillo and others appeared before this same august group. Softballs, and marshmallows. Imprecise statements and used hay.
Right. And the U.S. banking industry, the Fed, the President, Congress and every foreign central bank on the planet are going to stand idly by and allow that to happen.
Last chance at the brass ring for the crony capitalists in the White House to eliminate GSEs, a perennial bugbear.
Reposting.
FED wants merger with SEC and CFTC... DID i hear correctly????!
Anyone else can confirm that?
BB: of course! All the better to hose the rest of us.
crispy,
same old shit.
Cheers,
"We cannot allow them to fail," McCain told reporters at a diner in Livonia, Michigan. "They are vital to Americans' ability to own their own homes, and we will do what's necessary to make sure that they continue that function."
Paul "I understand your frustration.."
LOL.
I wonder when the FED will open the GAF (GSE Auction Facility).
wrong ! McCain WRONG!
they are not vital
fair trade, that's vital
open books, vital
The WSJ article on Fannie suggested a government capital infusion. This to me feels like bailout-lite. Instead of assuming all the outstanding obligations at once, the Feds could buy an equity stake and then wait to see what happens.
I would imagine this would be dilutive to the stocks.
They just glossed over the questions.. lol
Ben says by monday there will be new rules!
I'm parked where there is no risk of zero, at least in the last 5,000 years.
You put all your money in slaves?
"crispy&cole writes:
· · · · · ·"
I think it's an acronym, means 'Short Our Stock
This is a no brainer here, i.e, " conforming accounting measure". These entities as we know them will simply change the way they measure reality. I used to be pissed off with companies that would post as-adjusted-for GAAP EPS, but in time, you begin to see a slower rate of decay as larger adjustments are added into the sewage of dilution!
Yep, just like when they click the mouse and make more money. Sounds like he understands the limits (or lack thereof) of his power.
Anonymouse,
"You put all your money in slaves?"
Naw. That's what these guys on TV are doing right now.
Cheers,
Seb,
I think you may be missing the point. They fail if they fail, if the "govt" has tostep in and prop up that means they have already failed once. What the govt does after the fact determines if the public sees a second failure or a salvation...
IMHO
Meanwhile, at Pimco Headquarters, Alan Greenspan continues to help the firm make another Billion.
"Congress may wish to consider whether new tools are needed for ensuring an orderly liquidation of a systemically important securities firm that is on the verge of bankruptcy." -BS Bernanke
They want to catch them before they splat on the sidewalk - and strangle them quietly instead.
Freddie was 67.20 at it's 52 week highs and now is 7.92.
In any other country, that would constitute a failure.
Someone should tell the fed guys about recapitalizing it now.
It may not be a stock blog but all investors should get familiar with charting (and basic TA), whereas I know that a lot of people never look at charts. So it is easy to confuse the masses by just having the media mention market is up one day, down the next and so on... giving the impression of "volatility" as opposed to the solid establish downtrend we have. As David Tice (Prudent Bear fund in Dallas) said: "these days most investors are akin to frogs in water being heated very gradually, it does not realize its being cooked..."
Bloomberg News
This morning, one of the CNBC guys blurted out "Oh my GOD" when the FRE real-time chart came up.
Stock is up 20% from that moment.
I am uploading the clip to YouTube now...
BS Bernutty: "Market dicipline is the heart of our system"
Bwahahahahahaha
Tell that to Bear you POS!!
What a bunch of dueche bags.
I think I have to go puke now.
Cheers,
Lehman is "critical" to what? My goodness, what's this about?
Have Paulson, Bernanke, Sheila Blair, or anybody else who is considering guaranteeing Fannie's and Freddie's bonds or bailing them out in any way, divulging where the government is going to get the money to participate.
Visitor count ticking over 400... hmmm... TED spread now up to 1.09...
The next phase has begun.
awgee writes:
divulging where the government is going to get the money to participate.
Where they always get it from, future promises.
FED wants merger with SEC and CFTC... DID i hear correctly????!
deck chairs?
If I move to Canada will still have to pay my portion for the "implied guarantee"?
Any chimes ringing yet on your esteemed colleagues latest timepiece?
Where will the hotel maid get her jumbo loans now?
"Have Paulson, Bernanke, Sheila Blair, or anybody else who is considering guaranteeing Fannie's and Freddie's bonds or bailing them out in any way, divulging where the government is going to get the money to participate."
Actually, all those future generations have been proving quite generous as of late. Those stimulus checks on their behalf were amazing!
The willingness of these future generations to backstop F&F bad debts is truly remarkable.
THREE CHEERS FOR THE GENEROSITY OF FUTURE GENERATIONS!
the graph shows a race to zero. Who will reach there first...
On a serious note, any Capital injection, even at an equity level may be dilutive but it will be positive for the stock price.
Short the spike on bailout announcement should be your watchword, problem is that today opportunity passing me by....however risk of bailout at anytime is real so I'm not playing
energyecon, that isn't funny. Alarms are going off all over the place.
Weather Helm,
Nice.
Cheers,
Just short Bucky it's a no brainer at this point.
I'm sure no one wants to discuss the stock mkt with their Congressional reps, but you may want to recall how vulnerable your pension funds are to fraud by your fiduciary managers that are now able to play hedge fund gurus with your cash; thank Bush and 99% of Congress for your impending losses -- because your cash is available as swap bait! Many will recall the issue of exemptions for prohibited actions as they relate to your money being used for derivatives, etc... Thanks be to The Department Of Labor and Bush!
If you have not read the 1000 page PPA, you are not alone, and there is comfort in that, as misery loves company!
Re: House Approves Smoothing Technique in Pension Bill | workforce.com
The measure makes technical corrections to the Pension Protection Act, which was signed into law in 2006 and went into effect in January of this year.
its the ron paul show...
LEH Discovers Scientific Miracle: turns the gorilla into a chimp
I remember in Taleb's book Black Swan he considered Fannie Mae to be sitting on a pile of explosives (all that mortgage debt). Not really much in the way of Good Black Swan potential, but plenty of Bad Black Swan possibilities.
Whoever buys all those futures sure has been getting killed since, oh, January.
So what will happen with the credit default swaps written on FRE and FNM bonds?
Ron Paul " WHo's in charge of the dollar ?".
This market goes well with a fat bowl of OG Kush.
America's Swan Song is going to be ugly. How long 'till the yuppies go Fallujah on some poor sap in a Brooks Brothers three button?
Whoa. Was that the VP of Sales on the overpass?
And who now will buy all the toxic loans from Wachovia, Citi, Bofa, and WAMU?
Whoever buys all those futures sure has been getting killed since, oh, January.
Anonymous | 07.10.08 - 11:39 am |
Go take a look in the mirror.
Feel better now?
Cheers,
Looks like I picked the wrong week to stop sniffing glue.
So what will happen with the credit default swaps written on FRE and FNM bonds?
CDS on the companies themselves are behaving themselves -- meaning that few see an actionable default event. neither did bear CDS pay out, fwiw.
Conjure and I are going to sit back and watch the show.
Lance McDaniel said: "...They fail if they fail, if the "govt" has to step in and prop up that means they have already failed once. What the govt does after the fact determines if the public sees a second failure or a salvation..."
All I know is that this has been going on for over a year now, a great many small entities and a couple of large ones (Countrywide and Bear Stearns) have "failed", yet I still got my coffee and pastry at Starbuck's this morning and I've got a guy coming over to fix my garage-door today. The only place the financial/mortgage/housing world is coming to an end is in the headlines.
Sebastia
Did paulson just call China " An unnatural act?"
NJ state pensions will be circling the drain with Lehman equity, as the pols rushed in where sane investors fear to tread. For the jobs, they say.
MP,
Pickled or braised?
I just fell out of an airplane. Wind is kinda strong but other than that my donut still tastes pretty good.
Cheers,
If I had invested in $Z(Zimbabwe) I would be a trillioner(?) by now. We need a Mugabe and we need him now. So don't forget to vote for Mugabe in November.
energyecon writes:
Visitor count ticking over 400... hmmm... TED spread now up to 1.09...
That is scary - can you provide link/site where you can get that data in real time?
mp: what's the cigar of choice?
I've definitely got other things to do, but this is like watching OJ's slow-mo car chase or Most Amazing Videos.
I'm taking kids to pool shortly and will check back about 215.
"Whoa. Was that the VP of Sales on the overpass?"
Jumping, I hope.
bad analogy seb I did as you did but the sbux branch is getting closed along with 300 or whatever others and jobs crap as they are so it isn't just headlines hasnt been for a while
Sebastian wrote:
All I know is that this has been going on for over a year now, a great many small entities and a couple of large ones (Countrywide and Bear Stearns) have "failed", yet I still got my coffee and pastry at Starbuck's this morning and I've got a guy coming over to fix my garage-door today. The only place the financial/mortgage/housing world is coming to an end is in the headlines.
Meaning, this recession is all in your heads! Hooray for Phil Gramm and John McCain, our true savior!
Looks like I picked the wrong week to quit amphetamines.
Prepared Testimony of
Henry H. Hopkins
Chief Counsel and Vice President
T. Rowe Price Group, Inc.
404 : Page Not Found
To our knowledge, the Department has never identified a type of investment that was per se inappropriate for a plan investor. The Department has, however, recognized that certain types of plan investments may require a greater degree of sophistication on the part of plan fiduciaries. For example, in a letter describing fiduciary guidelines for the investment of plan assets in derivatives, the Department indicated that certain plan investments "may required a higher degree of sophistication and understanding on the part of plan fiduciaries than other investments."10
10 See letter from Olena Berg, Assistant Secretary Pension and Welfare Benefits Administration, U.S. Department of Labor to Eugene Ludwig, Comptroller of Treasury (March 21, 1996).
"Oh my GOD"
The only place the financial/mortgage/housing world is coming to an end is in the headlines.
seb, as always i appreciate your context -- but you should talk to my several friends who work/worked for various banks here in the midwest. many are looking at retirements delayed -- IF, that is, they get to keep their jobs, which is not at all certain -- or, if already retired, huge curtailments of plans thanks to collapsing legacy investments, in some cases looking at going back to work somewhere.
another good friend of mine is a manager for steve & barry's -- he's today i'm sure wondering how he's going to get another job to keep things going for his young family.
let's not pretend the world isn't ending -- it is, but only incrementally and (for the lucky ones) out of view.
Nemo - who's that idiot who suggested that it's now a "buy"? That's even funnier.
yup Nemo...you got it. 8 bips above todays bottom on the "oh my god" call.
OT: If you think we have an inflation problem, check out Zimbabwe dollars.. they actually have an expiration date on them:
Effective Demand: Rookies
Now wires reporting SAC is out saying it is bsuiness as usual with LEH - Steve Cohen agreed to sing after being stripped naked, exposed to a growling german shep and photographed for posterity
The only place the financial/mortgage/housing world is coming to an end is in the headlines.
The financial sector posted 40% of corporate profits during the boomtimes.
Americans owed $5.3T on their homes in 2001. Today it's $10.6T.
But in the interim, wages have been flat. Either housing was undervalued in 2001, wages are going to double sometime soon, or the financial/mortgage/housing world as we know it is going to implode under TRILLIONS of bad debts this decade.
Having lived in Japan in the 90s I think I've seen how this plays out.
Hint: a lot of the banks that were around when I arrived in 1992 were either closed or operating under different names and ownership structures in 2000 when I left.
Thanks, Nemo
It's only a market failure when all garage doors are unfixed. Well, it's a change from closing them too late.
er, make that TED spread at 1.12
Bloomberg quote for TED spread
The worse the market gets, the funnier this blog gets.
Pretty soon, it's gonna get hilarious.
yet I still got my coffee and pastry at Starbuck's this morning
FYI - that particular Starbucks is closing next month.
Steve & Barry's...the Enron of retailing.
"It's only a market failure when all garage doors are unfixed"
LMFAO!!
Yeah, Seb has taken to resorting to just plain dumb statements now that the Wright B had proven to be wrong.
Sebastian wrote:
All I know is that this has been going on for over a year now, a great many small entities and a couple of large ones (Countrywide and Bear Stearns) have "failed", yet I still got my coffee and pastry at Starbuck's this morning and I've got a guy coming over to fix my garage-door today. The only place the financial/mortgage/housing world is coming to an end is in the headlines.
... and my neighborhood supermarket parking lots are still full of huge SUVs+Hummers ... some people never learn, plus they may not have to either. What percent of the population is that? I hope (not) they have a good portfolio manager though.
Looks like your world is getting smaller, Seb. Keep retrenching. Is your Starbucks on the 'good' list?
er, make that TED spread at 1.12
econ, i'm left to wonder if there isn't room for a creditanstalt event in europe.
Bloomberg.com:
Personal Finance
We all know about the cliff diving, but is this rock climbing? Sheer face climbing?
I've got a guy coming over to fix my garage-door today. Sebastian
If you handyman skills are as poor as your stockpicking ones I'd subcontract as well.
I'd like to thank Citi at this time who are paying for my San Fermin experience this year and for years to come(except next year when I go to shootzenfest in Hannover.)
gaius marius | 07.10.08 - 11:53 am |
Do I feel a little bad for your friends...Yes. But shit happens. I have been laid off twice in my life. The world doesn't end. You do what it takes to get on with life. Join the crowd...
Chris
So it is easy to confuse the masses by just having the media mention market is up one day, down the next and so on... giving the impression of "volatility" as opposed to the solid establish downtrend we have. -- Genevieve
I've noticed that when the Dow is up, NPR will say (for instance) "... Dow up 175 points today to 12,175." But if the Dow is down, they'll simply say "...Dow down 175 points today," omitting the close.
Boosterism?
Sebastian, I'm with you, pal. And have you seen where people talk about the earth being round? Everywhere I look, flat, flat, flat.
"It's only a market failure when all garage doors are unfixed"
...and when the cars inside do not even get stole
Where's Charles Schumer, ya know, with all this talk about insovency of financial institutions and systemic risk ? We need someone in a high profile position to spread a little fear today and start some good old fashioned bank runs.
Pah pah pah Paul...Pauls... Paulson refused to discuss systemic risk.
"let's not pretend the world isn't ending -- it is, but only incrementally and (for the lucky ones) out of view.
gaius marius | 07.10.08 - 11:53 am | # "
As always, one's view of the world is generally what one can see from where one stands. For the self-satisfied and incurious, that's good enough. Those who prefer to roam around a bit, see more.
Anonymous Bosch writes:
NPR boosterism
....IMO NPR does not do financial news too well (usually lagging and/or inaccurate + naive) but if you really want to feel sick you can listen to "market place" and particularly "that stockbroker from Dallas"... again IMO
So remind me again what a rising TED spread means. Just that banks are unwilling to lend to each other?
Predictions for the close, gentlemen (and ladies)?
So if the Freddie and Fannie get bailed out by the government, does the credit worthiness of the government get downgraded as some have suggested?
Close, down 400.
Will the Fed / Treasury announce something clever tomorrow to once again pacify the natives?
Market closes up today, 40. Tomorrow, below 11k - and if not tomorrow, then Monday or Tuesday.
Good god. Higher education doesn't need more federal loans as it does a bit of deflation...
Seb-The only place the financial/mortgage/housing world is coming to an end is in the headlines.
Not quite true. Here in the insulated land of the DC burbs... Neighbors who have relo'd caught with 300K losses, others that were here pre 2004 have taken a little too much equity out, but many bought toys that they are putting up for sale...
Garage doors and pastries aside, some habits are hard too quit even for those playing on paycheck to paycheck.
Its not all in the medias mind, we expereinced the 20-25% growth and the no docs and the existing HO ATM...
Over the last 3 years or more you have to give Case-Shiller and Roubini props for calling closer than anyone else so far..
But these neighbors dont play the markets they are invested in the Govt retirement system which even though is losing is not losing as fast as congress fund managers are our fund managers...
BTW starbucks was a bad pull as they announced last week closing 600 company owned stores...
Sebastian said:
"All I know is that this has been going on for over a year now, a great many small entities and a couple of large ones (Countrywide and Bear Stearns) have "failed", yet I still got my coffee and pastry at Starbuck's this morning and I've got a guy coming over to fix my garage-door today. The only place the financial/mortgage/housing world is coming to an end is in the headlines.
"
I hope that Starbucks you went to isn't one of the 600 locations that's closing.
At close today:
Dow +3.27
NASDAQ +18.50
S&P +4.36
LEH @ $17.85
I buy my coffe at the quikie mart and eat a pop tart and fix my own garage doors BTW because it's prudent. Not because i have to.
So remind me again what a rising TED spread means. Just that banks are unwilling to lend to each other?
The higher the TED spread the higher the perceived probability of bank failure.
Zarathustra writes:
Looks like I picked the wrong week to quit amphetamines.
......
Surely, you can't be serious.
Ben just admitted it.. they will stem bank failures at all cost.
Inflation is next after the deflation.
gaius marius,
Ending for some, not so bad for others.
By Reuters | 10 Jul 2008 | 11:32 AM The White House remains focused on passing legislation on Fannie Mae
and Freddie Mac that will give confidence to the financial markets, a White House spokesman said Thursday, amid ongoing concerns about the mortgage finance heavyweights' capital levels.
"What we're focused on is getting legislation done for these important institutions, which will give confidence to markets so they can better perform their role," White House spokesman Tony Fratto said when asked whether the administration had discussed what to do if the two government-sponsored enterprises and major sources of mortgage financing falter.
"That's the single most important thing we need to accomplish.
how is having to come up with legislation supposed to make us feel more confident...its the actions before today that make us weary not the actions of tomorrow.........
Shares of commodity risk management firm FCStone Group Inc slumped over 50 percent Thursday, its biggest percentage drop ever, after posting a quarterly profit that fell short of analysts' view.
UPDATE 2-FCStone shares plunge after earnings miss Street view
| Reuters
Damn anal-list anyway. HAAaaaaaaaaaaaa
Genevieve
NPR is on in the background. It would be folly to use it as timely news, they're so often so late. Mrs.B who barely listens is constantly regaled with my screams apropos their latest absurdity.
JerseyGirl
Zara is serious. And don't call him Shirley!
"Oh my GOD"
Nemo, thanks for that, from those of us who don't have TV.
Best bit, JK: "6.88 might be a buy... are you putting a buy out on that?"
Always be Closing!
NY Day isn't done, but it's bedtime for me.
We'll see what comes across the Pacific tomorrow.
NPR is good at analysis, which takes time. So yeah, they're a bit behind. For timely financial news, you have to listen to Right Wing Radio.
"What we're focused on is getting legislation done for these important institutions, which will give confidence to markets so they can better perform their role,"
What we are doing is letting a couple of bankrupt companies who's insiders have been fleecing the public for years a pass and if we have to print money and throw it out of helicopters to bail these people out we will do it. Printing money and throwing it out of helicopters goes a long way toward restoring CONfidence. That and slipping a little pink to the taxpayers although I'm not to sure how many of those we still have.
PPT trying a massive pump to coincide with BB and Paulson's puppet show. I don't think it will work. Wheels will fall off this rally, and god knows where we end up. I think massively down at end of day.
homedad- "mp: what's the cigar of choice?"
Macanudo Duke of Devon Maduro
Lance- "BTW starbucks was a bad pull as they announced last week closing 600 company owned stores..."
Yeah, and don't forget the thousands of "partners" being thrown under the bus.
Stryker.....Stryker....Stryker!
421 visitors, damn is something happening?
"421 visitors, damn is something happening?"
No, I'm just bored.
The higher the TED spread the higher the perceived probability of bank failure.
Which bank?
The White House can pass all the legislation it wants, but show me the trillions. Maybe they can use leverage, just call some of the BSC folks for advice on that. Closing number is a toss up, but the PPT is really shoveling today, so it will be green, maybe 50 points, and Bubblevision will call it a victory representing faith in the whole system. We may be burying food by next week though.
Macanudo Duke of Devon Maduro
It's good to be green, unless yer a seegar.
"## Which bank?"
All of them.
YouTube - So long and thanks for all the fish
"So long, and thanks for all the fish."
Lefty,
total coincidence, but I'll take it.
487 visitors, the sharks are circerling.....
Genevieve said: "... and my neighborhood supermarket parking lots are still full of huge SUVs+Hummers ... some people never learn, plus they may not have to either. What percent of the population is that? I hope (not) they have a good portfolio manager though."
Hey, I've been driving economy cars since the last oil crisis, and Carole King wrote "Pleasant Valley Sunday" about 40 years ago.
"...Another Pleasant Valley Sunday
Charcoal burning everywhere
Rows of houses that are all the same
And no one seems to care..."
There's nothing new going on here that I haven't seen before, except that anonymous strangers from all over the country can now commiserate about it to each other without wires.
))
Sebastia
Oh my Glod!
They keep prattling on about systemic this and systemic that. That IS the message. All else is horse poop.
Systemic failures.
No this ain't about Bear...this is about the next freight train rumbling down the tracks, headed for that blown out bridge.
Cheers,
All banks? What about .....
OMG! RFTH!!!! We're freaking doomed!!! (hat tip Mogambo Guru)
Seb, when you are serving the soup to me, don't forget the bread and butter.........you have been warned.
Most interesting factoid of all, in my view:
With all the multiple-percent moves in the indices and the feelings of being whipsawed we've had over the past week or two, the VIX stands right now only at 25.6.
That's basically the bottom end of the range where it spent most of January and all of March - and nowhere near the post-BSC peak of 35 and change.
If this is what a VIX of 25 feels like, what the hell's a retest of the mid-30s gonna do? I'm going long blood-pressure meds.
cover your shorts! contrarian indicators everywhere.
Sebastian writes:
))"
"There's nothing new going on here that I haven't seen before, except that anonymous strangers from all over the country can now commiserate about it to each other without wires.
... not commiserating, I do not do emotion (or stress). And nothing is that new indeed, charts just look like 2001, for example. "Nothing is new" was my point
ice try, only trade, but you guys have been wrong an awful lot lately. sometimes, even the contrarian indicators fail. Like now.
Only trade:
... this is not a Yahoo (GS) board
Vix not ready to reverse down. Put/call around 1.
Did Sebastian just say "let them eat cake"?
errr let them eat a cinnamon chip scone....
Mook: For what it's worth (from WSJ's MarketBeat):
Perhaps volatility isnt that low, however, writes options strategist Don Fishback, on his blog. He notes that implied volatility of individual members of the S&P 500 has risen, even though the VIX has been slow to rise (in part, he says, because of the length of time it has taken for the S&P to fall.)
Option volatility is not really low! Yes, index option volatility may appear low, he writes. But implied volatility of individual equity options is extremely high.
Adam Warner amplifies this on his blog as well. You have two very large sectors, financials and energy, often moving violently, but in opposite direction. The net effect maybe causes elevated individual stock volatility, but not enormous stock index volatility, he writes. Remember that market volatility has two main drivers. One is the volatility of the stocks themselves, and the other is the degree to which they correlate.
z.
aww, come on guys, is it a coincidence that CR put up a chart just before it rebounded for today? Long time frame, go short. but for today, you should have covered at the time of the post.
Is tomorrow going to be Black Friday? Today feels like the dress rehearsal for tomorrow's big show.
Zach - Good stuff, thanks for the info.
I don't trade options, and I guess I always assumed the index volatilities were calculated taking the individual components into account. A "square root of the sum of the squares" calculation would do the trick - and that's high-school level math, for Christ's sake.
Eh, just one more data point you can't trust any more ...
"How long 'till the yuppies go Fallujah on some poor sap in a Brooks Brothers three button?"
November 4th, my friends.
So things have only just started to get bad with the foreclosures in the last 6 or so months. What happens a year from now, or two years from now, when even more homes foreclose and even more losses are heaped on to the lenders? How much loss can they take before large banks go under? And if banks start failing, is there enough FDIC insurance to save all the savers?
Zach ... etc:
XLF very near the monthly close lows tested in 2000, 2002 and 2003 so it is safe to assume there will be "volatility" there. Feel free to guess whether it will represent distribution or support.
mp writes:
homedad- "mp: what's the cigar of choice?"
Macanudo Duke of Devon Maduro
mp | 07.10.08 - 12:30 pm | #
These guys have a half off sale on MP's cigar of choice.
MACANUDO CIGARS,MACANUDO MADURO CIGARS,MACANUDO MADURO DUKE OF DEVON CIGARS 475 >
does that mean the bottom is in?
Mook,
The data point is trustable insofar as it says what it has always said. It's a measure of index volatility; why would you expect it to increase because of component volatility if the components correlate negatively and cancel each other out?
I was over Under, and Under was over Dunn....
Zack,
If true, why not short vol on the individual issues and go long vol on the index. An easy arbitrage play, no?
Last chance at the brass ring for the crony capitalists in the White House to eliminate GSEs, a perennial bugbear.
Alec | 07.10.08 - 11:18 am
Yes.
Well Fanny and Freddie are still above their one year lows so things can't be at disaster stage yet.
Ian Scott, Lehman's global strategist, is predicting an advance of 27 percent to 1,630, while David Bianco at UBS says the index will increase at least 25 percent.
Bears DALE WESTFOFF and LAURA GOODMAN @ UBS have been Institutional Investors #1 ranked mortgage analysts going on 10 years. T
Goodman wrote a glowing article about Alt-A securities last week hours before it leaked that UBS might be selling $20 billion of them to PIMCO.
I don't want to sound too cheery about this, but I'm thinking of buying a few thousand shares of Fannie. I think that valuing assets at fair market value doesn't make all that much sense when you see what the implied default/loss assumptions are.
Alec writes:
. I'd like to have a government bank to keep my money and a government broker to keep my stocks for me. I'd sleep better.
I've been exposed to more than my fair share of civil servants and the last thing I'd ever want is a custodial account thru any govt.
Alec | 07.10.08 - 11:12 am | #
The SS system and the Post Office work reasonably well. I don't see why ownership would make the employees lousy if management was up to snuff.
Finish them!
Let the Ponzi scheme fail. It will lead to a deflationary Depression, but better that than a hyperinflationary Depression that rewards kleptocrats!
It's a measure of index volatility; why would you expect it to increase because of component volatility if the components correlate negatively and cancel each other out?
Well, that's why something like "square root of the sum of the squares" would be valuable; if one component has a +2 up move and another equally weighted component has a -2 down move, the net effect on index volatility might be zero, but the net effect on volatility using the formula above would be ~2.7. They wouldn't "cancel each other out" because there would be no negative numbers.
shrug As I said, I don't trade options. Far be it for me to suggest that, say, the Nasdaq Composite volatility index should, to be meaningful, actually represent the volatility of the underlying components of that index. I'll stop with the crazy talk now ...
Looks like I picked the wrong week to quit shooting heroin.
only trade writes:
cover your shorts! contrarian indicators everywhere.
only trade | 07.10.08 - 12:47 pm | #
Nope this is a wave 3 down......they contrarian indicators will flash and flash and flash without a bounce. This is the point of recognition for a lot of people. Not everyone yet.
Misean......great commentary, I agree and think your dead on
MP......you've been spot on for a long time
Cheers,
Canadama
I am beginnig to feel so F'in betrayed by the system. We are all being screwed royally.
As a fairly young american who's finally arrived at a point in his life after waiting and waiting to spread his "financial wings", our goverment is changing all the rules. They pass all of this "socialistic" crap of housing bills, TAFS etc., possible nationalizing (bailout) of FRE and FNM, Bear Stearns bailout, and Fed's increase in their powers, etc.
The big boys gamed the system, squeeze every last penny out if, they break the toy and run to daddy for help so they can atleast keep what they still have.
The dynamics of how american real estate is played is now being completely dismantled. I fear the system might be shot for an entire generation of americans.
Nothing allowed to fail means nobody is gonna make money either. This is pathetic.
The dynamics of how american real estate is played is now being completely dismantled.
The dirty secret of America is that most fortunes have been made & maintained by real estate investments, an entirely un-productive economic sector.
"In order to prove legal title to land one must trace it back to the man who stole it" -- David Lloyd George
From the <a href="http://www.nytimes.com/2008/07/11/business/11fannie.html?hp>NYTimes:
Under a conservatorship, the shares of Fannie and Freddie would be worth little or nothing, and any losses on mortgages they own or guarantee which could be staggering would be paid by taxpayers.
So now the game continues: Business A has toxic junk that is stinkin' up the place.
Stockholders decide to jump ship while stock sinks.
Government (i.e. taxpayers) clean up the radioactive crap at a very high cost.
I thought BuschCo were all about "Free markets"
Amen, golfersteve. It's sad as heck. And infuriating too.